Definition of insanity

...doing the same things over again, and expecting a different result...

Ben Bernanke, chairman of the US Federal Reserve, today admitted the Government may be forced to inject billions of extra dollars into the American economy after warning of a "protracted slowdown".

Speaking before the House of Representatives, Mr Bernanke suggested that the US required another “significant” fillip to help stimulate growth after Americans were granted $168 billion worth of tax rebates in May, to encourage spending and boost consumer confidence.

A new plan would come on top of the $700 billion bailout of the country's ailing banking sector, which includes $250 billion in funding to buy shares in American lenders.

This won't stimulate the "growth" of anything except the cancer at the heart of this mess. True growth would involve sustainable productive capacity. But Uncle Sam, ever the addict, is really just after another short term "fix" of steady consumer spending, financed by debt. The economic slowdown everyone's worried about is only to be expected as the force of gravity finally corrals our high-flying profligate spending. Our problems were created by people not saving, and instead mortgaging themselves to their eyeballs to spend, spend, spend. So what makes anyone think that making credit even more accessible and flooding the economy with even more manufactured 'dollars' is going to do anything but make things worse? It's like trying to cure a stomach ache from overeating by going back to the 'fridge. Or, perhaps a more apt analogy, 'the hair of the dog.'

Problem is, sooner or later one has to sober up. Our current accounts are empty, and we've managed to saddle the next several generations with mountains of debt that are only getting higher with our foolish attempts to postpone a necessary tightening of the belts.